The Local Authorities (Capital Finance and Approved Investments) (Amendment) Regulations 1995

Initial and subsequent cost of leases

4.  In regulation 7—

(a) in paragraph (2), for the words “paragraph (3), (4) or (5A) below” substitute “paragraph (3), (4), (5A), (5C), (5D), (5F), (5G) or (5H) below”;

(b) for paragraph (3) substitute the following—

“(3) This paragraph applies to a lease (“the current lease”) of land the term of which, or the residue of the term of which, does not exceed three years, unless—

(a) the local authority who become the lessees had, at any time within the period of five years immediately preceding the date on which they become the lessees—

(i) a freehold interest in the whole or part of the land in question (“the land”), or

(ii) a leasehold interest in the whole or part of the land, the term of which, when added to the term of the current lease, exceeds three years; or

(b) any other local authority had, within the same period, a leasehold interest in the whole or part of the land, the term of which, when added to the term of the current lease, exceeds three years.”;

(c) in paragraph (5A), in sub-paragraph (c), for the word “regulation” substitute “paragraph”;

(d) insert the following paragraphs after paragraph (5B)—

“(5C) This paragraph applies to a lease of land (“the current lease”) where—

(a) the current lease is of a dwelling-house (“the dwelling”) which, immediately before the grant of that lease, was let or occupied under an excluded tenancy granted by the local authority who become the lessees (“the authority”);

(b) the term of the current lease does not exceed two years and ends not later than 1st October 1997;

(c) the authority had a leasehold interest in the dwelling which expired not earlier than 21st December 1994, and—

(i) was a lease falling within paragraph (3) or (4) above which was acquired by the authority or another local authority on or before 21st December 1992; or

(ii) was a lease falling within paragraph (5A) above.

(5D) This paragraph applies to a lease (“the current lease”) of relevant land, other than a lease falling within paragraph (4), (5A) or (5C) above, the term of which, or the residue of the term of which, does not exceed ten years, unless—

(a) the local authority who become the lessees (“the authority”) had, at any time on or after 1st April 1990 and before the date on which they become the lessees, a freehold interest in the whole or part of the land demised by the current lease (“the land”);

(b) at any time on or after 1st April 1990 and before the date on which the authority become the lessees, any other local authority had a leasehold interest in the whole or part of the land;

(c) at any time on or after 10th March 1988 and before the date on which they become the lessees, the authority acquired a leasehold interest in the whole or part of the land;

(d) the current lease confers on the lessee an option to purchase the lessor’s interest in the land; or

(e) the capital cost of the lease exceeds 70 per cent. of the relevant value.

(5E) In paragraph (5D)—

“relevant land” means any land other than land which, if acquired by a local authority, would be a house, dwelling or other property to which section 74(1) would apply;

“relevant value” means the value of the lessor’s interest in the land as estimated by the authority before they become the lessees—

(i)

on the assumption that they will become the lessees under the current lease, and

(ii)

according to the statement of practice most recently published by the Royal Institution of Chartered Surveyors on the valuation of property for company accounts.

(5F) This paragraph applies to a lease of land where—

(a) the term of the lease does not exceed seven years;

(b) the local authority become the lessees immediately upon the expiry of another leasehold interest which the authority had in the land in question (in this paragraph referred to as “the preceding interest”);

(c) the preceding interest was a lease falling within paragraph (3) above as that paragraph had effect on the date when the lease was acquired;

(d) but for the preceding interest, the lease would fall within paragraph (5D) above; and

(e) if the term of the lease does not exceed three years, the lease would, but for the preceding interest, fall within paragraph (5D) above if it were for a term exceeding three years.

(5G) This paragraph applies to a lease of land (“the lease”) where—

(a) the local authority who become the lessees are a new police authority;

(b) the old police authority occupied the land demised by the lease on 31st March 1995, and the new police authority become the lessees before 1st April 1996;

(c) immediately before the date on which the new police authority become the lessees, another local authority have a freehold or leasehold interest in the land demised by the lease;

(d) the term of the lease, or the residue of the term of the lease, does not exceed ten years;

(e) the lease does not confer on the lessee an option to purchase the lessor`s interest in the land demised by the lease; and

(f) where the term of the lease, or the residue of the term of the lease, exceeds three years, the capital cost of the lease does not exceed 70 per cent. of the relevant value.

(5H) This paragraph applies to a lease of land (“the lease”) where—

(a) the local authority who become the lessees (“the authority”) are—

(i) a county council of which the old police authority was a committee constituted in accordance with section 2 or 3(4) of the 1964 Act as it had effect before 8th August 1994(1); or

(ii) the council of any constituent county where the old police authority was a combined police authority constituted in accordance with section 3 of the 1964 Act (other than section 3(4)) as it had effect before 8th August 1994;

(b) the old police authority occupied the land demised by the lease on 31st March 1995, and the authority become the lessees of the new police authority before 1st April 1996;

(c) immediately before the date on which the authority become the lessees, the authority have a freehold or a leasehold interest in the land demised by the lease which was vested in the new police authority under article 9 of the Commencement Order;

(d) the term of the lease, or the residue of the term of the lease, does not exceed ten years;

(e) the lease does not confer on the lessee an option to purchase the lessor’s interest in the land demised by the lease; and

(f) where the term of the lease, or the residue of the term of the lease, exceeds three years, the capital cost of the lease does not exceed 70 per cent. of the relevant value.

(5I) In paragraphs (5G) and (5H) above—

“the 1964 Act” means the Police Act 1964(2);

“the 1994 Act” means the Police and Magistrates' Courts Act 1994(3);

“the Commencement Order” means the Police and Magistrates' Courts Act 1994 (Commencement No. 5 and Transitional Provisions) Order 1994(4);

“new police authority” means a police authority established under section 3 of the 1964 Act (as substituted by section 2 of the 1994 Act) for a police area;

“old police authority” means, in relation to a new police authority, the police authority which is superseded by the new police authority; and

“relevant value” means the value of the lessor’s interest in the land demised by the lease in question as estimated by the authority before they become the lessees—

(i)

on the assumption that they will become the lessees under the lease, and

(ii)

according to the statement of practice most recently published by the Royal Institution of Chartered Surveyors on the valuation of property for company accounts.”;

(e) in paragraph (6), in sub-paragraphs (a) and (c), for the words “paragraph (3), (4) or (5A) above” substitute “paragraph (3), (4), (5A), (5C), (5D), (5F), (5G) or (5H) above”;

(f) in paragraph (7), for the words “paragraphs (3), (4), (5A) or (6) above” substitute “paragraphs (3), (4), (5A), (5C), (5D), (5F), (5G), (5H) or (6) above”;

(g) in paragraphs (6) and (7) before the words “The initial cost in relation to a lease” insert “Subject to paragraph (10A),”;

(h) in paragraph (10), in sub-paragraph (d), for the words “section 31 of the Police Act 1964” substitute “sections 31, 31A and 31B of the Police Act 1964(5))”; and

(i) insert the following paragraphs after paragraph (10)—

“(10A) A local authority (“the authority”) who become the lessees under a lease falling within paragraph (6) or (7) above (“the current lease”), may reduce the amount which, apart from this paragraph, would be the initial cost of that lease by an amount not exceeding the balance of the released credit cover in relation to a relevant lease.

(10B) In paragraph (10A) above, the balance of the released credit cover in relation to a relevant lease is an amount determined by the authority by—

(a) estimating, at the relevant time and on the assumptions specified in paragraph (10C), the initial cost of a new lease of the land demised by the relevant lease; and

(b) subtracting from that estimate any amount which the authority have already applied out of that estimate in reduction under paragraph (10A) of the initial cost of a lease other than the current lease.

(10C) The assumptions specified for the purposes of paragraph (10B) are—

(a) that the term of the new lease is equal to the term of the relevant lease less the expired period of that term;

(b) that the new lease would be a lease falling within paragraph (6) or (7) above;

(c) that apart from the term of the new lease, the new lease is identical to the relevant lease; and

(d) that the initial cost of the new lease fell to be calculated at the time when the initial cost of the relevant lease was calculated.

(10D) In paragraphs (10A), (10B) and (10C) above—

“relevant lease” means a lease which, at the time when the authority became the lessees, was a lease falling within paragraph (6) or (7) above; and

“the relevant time” means the time when the authority’s interest in a relevant lease ceases other than by reason of the expiry of the term of that lease.”.

(1)

See the Police and Magistrates' Courts Act 1994 (Commencement No. 1 and Transitional Provisions) Order 1994. On 8th August 1994, subject to modifications, section 2 of the 1994 Act came into force for purposes which included the appointment of members of the new police authorities.

(2)

1964 c. 48.

(3)

1994 c. 29.

(4)

S.I. 1994/3262 (C. 83); amended by S.I. 1995/246 (C.8).

(5)

1964 c. 48. Sections 31, 31A and 31B of the Police Act 1964 are substituted by section 17 of the Police and Magistrates' Courts Act 1994 (c. 29).